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The transition to Ni‐based battery cathodes enhances the energy density and reduces the cost of batteries. However, this comes at the expense of losing energy efficiency which could be a consequence of charge–discharge hysteresis. Here, a thermodynamic model is developed to understand the extent and origin of charge–discharge hysteresis in battery cathodes based on their cyclic voltammograms (CVs). This was possible by defining a Gibbs energy function that weights random ion insertion/expulsion, i. e., a solid solution pathway, against selective ion insertion/expulsion, i. e., a phase separation route. The model was verified experimentally by the CVs of CoOOH and Ni(OH)2 as solid‐solution and phase‐separating cathodes, respectively. Finally, a microscopic view reveals that phase separation and hysteresis are a consequence of large ionic radii difference of the reduced and oxidized central metal atoms.